INTERVIEW: Square Enix

As X Factor contestants capably demonstrate on a weekly basis, there is no difference of ambition between the gifted and the bewildered. Brilliant icons-in-waiting share the same self-belief as tone-deaf fantasists.

The game business is of little difference to Simon Cowell’s talent-contest-meets-Victorian-freak-show. The audience has the ultimate decision on whether a company is star material or being booted off stage. Square Enix wants to build a top three publishing empire upon which the sun never sets.

It aims to build brand new, globally-focused, successful franchises, leveraging an extensive international audience using business channels in Europe, the US, Japan, and now China too.

“There are many companies out there who focus their business on America and Europe, and there are some companies which focus on Japan – nobody but us covers all,” Square Enix Group CEO Yoichi Wada tells MCV with a degree of pride.

Before April last year he wouldn’t have made such a claim. That was the month when the Japanese RPG specialist sealed a £84m acquisition of Britsoft publisher Eidos, and became a transcontinental enterprise overnight.

Square Enix Europe, as it was rechristened, held on to its CEO Phil Rogers during the takeover. Sat with Wada for our meeting, he tells MCV that the company’s new global agenda is not merely leveraging Eastern properties in Europe and the US – it’s about returning fire with Western games that can break into the Japanese market.

“I think today, [releasing Square Enix Europe’s games in Japan] hasn’t been as much a focus as it will be in the future,” Rogers says.

“Across the whole industry, only a limited number of titles have actually succeeded in both the West and in Japan. It’s true that Eidos’ market was a Western audience, but now we’re evolving as a company – one that shares information.” That international transfer of knowledge is key to cracking the global games market.TEAM AMERICA

One year after Square Enix incorporated Eidos, the firm looked to bolster its operations in America too by appointing Mike Fischer as CEO of US-based subsidiary, Square Enix Inc. Fischer, fluent in Japanese, breaks into conversation with Wada during our interview.

“There are a lot of Western games that go on sale in Japan,” Fischer says. “But they only tend to be cases of republishing. The game is built, maybe localised and then shipped.”

Fischer’s observations are drawn from two decades of industry experience, having worked in the US, the UK and Japan at publishers including Namco, Sega and Microsoft.

The main lesson in building a global success, he says, is taking into consideration all markets early in the design phase of a game.

“I think we have the opportunity here to have conversations much more upstream at the development level, to start thinking earlier in the process about the requirements for global success,” he adds.

Wada concurs, and says the knowledge all three CEOs can share between each other can be inestimable: “Our business model is quite often misunderstood as hierarchical. It is not.

“All of our groups are in a mixture, which from the outside may look a bit messy and complicated. We deliberately leave it this way because the industry is in a transitional phase – its foundations are shifting – and so we need to keep our business flexible. We need to keep close communications between each of us, otherwise we wouldn’t survive.”

Rogers elaborates: “We want to share more information at a design level, and look at how games in the West can be tweaked to work better in Japan. We’ve been looking at certain franchises and seeing what features Western gamers would accept or like that also work well in Japan.

“I think you’ll see more focus in the future from Square Enix’s games, and that was indeed one of the benefits of the Eidos acquisition – we can share more relevant information”.AROUND THE WORLD

Wada says the trio’s ambition is to be a top three publisher within five years, an achievement that might only be possible if Square Enix can respond quickly to an industry whip-lashed from online phenomena.

“The market itself is exploding,” Wada says. “And geographically it is expanding. We have started seeing the unconventional gamers come into the scene, and so the potential market size is completely different from what we had before.”

Fischer suggests Square Enix’s US division is preparing to break into these nascent online markets.

“I look forward to using our US operation as a resource for driving more network-oriented gaming initiatives,” he says.

“With due respect to the innovation that is happening all over the world in this area, the US West Coast has been home to an incredible amount of successful online gaming companies including Zynga, OnLive, Valve and Steam, PopCap Games, Sony Online and Blizzard just to name a few.

“I want to take advantage of our location in the US to source the best ideas, talent and content that will make Square Enix as strong in the online world as we are with our traditional games.”

“Yes,” Wada adds, “however, as far as social gaming is concerned, this isn’t necessarily our goal.

“The business model of social gaming has presented something different from conventional gaming, but that business model isn’t our goal. The industry’s foundation is transforming, but Square Enix is not necessarily shifting away from the current console path to what we are seeing as social gaming.”

It’s a deliberately unambiguous claim from the man who was predicting the extinction of physical media the last time MCV caught up with him. Clearly he has new reasons to believe in bricks and mortar with the likes of Kane & Lynch 2 and Just Cause 2 both hitting the top spot in the UK charts.

“We have dozens of IPs, some of which we wish to build into franchises. Deus Ex 3, for example, is something we are trying to revive,” Wada says. “We want to keep on producing profit from that IP for the next ten years.”

And Final Fantasy? The 13th instalment sold one million units on its first day in Japan, and went on to shift over 1.8 million units in North America and another 1.8 million in Europe. Yet some reports suggested hesitance within Square Enix on the future of the franchise.

“Final Fantasy has always been a bread-earner for us,” says Wada. “It has always been profitable. Of course, we would like to be expanding on those two key IPs [Final Fantasy and Deus Ex], and others that are very strong to us. We would like Final Fantasy to continue as long as there are the customers who support Final Fantasy.”

Wada never suggests Final Fantasy is becoming merely a relic of the firm’s biggest past successes. The most recent sales figures tell their own story.

Yet it is becoming clear that for Square Enix to compete on the same scale as Activision, EA and even Ubisoft, the company needs more than one runaway success. It needs, as he suggests, a brand new, fresh IP that is inherently built with the world market in mind.

That will be the firm’s next big X Factor moment; bringing on stage a new franchise that will either win rapturous applause or be voted out. Wada understands the risk, but he also sees potential in capturing new markets.

“We will naturally pursue active creation of new IPs,” he says.

“Unfortunately, some of the IPs we have are not so strong, and perhaps if we put more attention on them our efforts would be wasted. But what we want to do is create something globally appealing. And if our teams can create something that appeals to a global audience, that will be the next step.”

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MCV is the leading trade news and community site for all professionals working within the UK and international video games market. It reaches everyone from store manager to CEO, covering the entire industry. MCV is published by NewBay Media, which specialises in entertainment, leisure and technology markets.